1. www.HFPeurope.org European Hydrogen and Fuel Cell Technology Platform THIRD SEMINAR WITH INDUSTRIAL LEADERS OF TECHNOLOGY PLATFORMS Brussels 16 December 2005 Phil Doran phil@coretecventures.com Partner - Core Technology Ventures Member of Finance Group – HFP phil@coretecventures.com

2. www.HFPeurope.org16 December 2005 Page 2 OUTLINE Part 1 – Background of the Policy and Renewables Landscape The Ultimate Goal, Carbon Free Energy Distribution of the European H2&FC Industry Policy Overview Part 2 - Sources of Finance Public & Private Equity Markets Public Debt Markets Government Support I: Tax breaks, capital allowances Government Support II: R&D Grants 3. Final remarks We focus on how the various H2&FC developers, (industrials, micro companies and academe) are able to access the debt & equity markets and the flow of public funding. In this context we consider the objectives these funding sources satisfy and who benefits from these sources of funding within the context of the nascent European H2&FC industry.

3. www.HFPeurope.org16 December 2005 Page 3 Background: The Ultimate Goal, Systems Integration

4. www.HFPeurope.org16 December 2005 Page 4 Background: Spread of the European H2&FC Industry *Source: CTV estimates. Data refer to number of European entities developing H2&FC related hardware but excludes well-capitalised & quoted companies

5. www.HFPeurope.org16 December 2005 Page 5 Energy policy objectives Energy security Sustainable Supplies Industrial policy objectives Economic growth/ Jobs R & D & innovation Environment policy objectives Global Warming Clean Air Promotion of renewable energy Innovation in DG energy technology local jobs (regional policy) Health and Safety Promotion of clean conversion devices Background: Policy Overlap

6. www.HFPeurope.org16 December 2005 Page 6 Finance and the European Fuel Cell Industry Public Equity Markets Ordinary Shares Warrants … H2&FC DevelopersSources of Funds Industrials Public Debt Markets Bond Markets Bank Loans Independent Micro Companies Government 2 R&D Grants Universities & Research Institutes Government I Tax Breaks Capital Allowances Private Equity Markets Ordinary Shares Warrants … Supplies of Funds Private Sector Pension funds Individuals, Venture Capitalists European Investment Fund? Public Sector National & Local Governments Public Sector European Union Public Sector European Investment Bank Projects

7. www.HFPeurope.org16 December 2005 Page 7 Closing Remarks Debt & Equity: Established companies can easily access the public debt and equity markets. In principle new companies have access to private equity supplied by venture capitalists and individuals. However, the European H2&FC industry struggles to attract such finance and is thus significantly disadvantaged. Government Support: Comes in the form of tax breaks and capital allowances, which benefits companies with revenues to tax & balance sheets to invest. Another source of government support comes in the form of R&D grants, which for the private sector must be matched by company resources. Only those companies with sufficient capital resources can use such instruments. European Investment Bank Support: The EIBs presence on the Finance Panel has been highly constructive. We believe that the Banks approach will be extremely useful in aiding the deployment and validation of H2&FC technologies within the European Union & believe that these instruments will play an invaluable role in promoting the development and deployment of H2&FC technologies but also in the promotion, understanding and acquisition of the skill base necessary to the commercial introduction of such a group of novel technologies. The banks support can be expected to underpin & leverage the EUs support. Causes of Concern We feel that work needs to be done to address the specific needs of micro developers, who are starved of the necessary equity to develop their technologies. Further, the needs of those developers within Europes Research Institutes and Universities who would seek to monetise their technologies need to be addressed: On taking their inventions out of the academic environment, typically financing dries up. Given the EIB cannot address these needs, other institutions within the EU, such as the European Investment Fund should be encouraged to fill the equity gap faced by Europes H2&FC developers & would be entrepreneurs. Only then would the independent micro sector be in a position to avail itself of R&D grants and ultimately public markets. A unified approach that took account of the financial difficulties associated with the deployment and validation of H2&FC technologies and the financial difficulties associated with independent developers or would-be university entrepreneurs would go a long way to establishing Europe not only as a leading consumer of these technologies but also a leading provider of these technologies.